2025 (4) TMI 165 - HC - GST

GST Demand Order Partially Invalidated for Exceeding Show Cause Notice Amount by 77 Lakhs Under Section 75(7)

Tvl. Glo Shipping Logistics Pvt. Ltd., Represented by its Finance Manager Versus The State Tax Officer, Tamil Nadu

The HC partially allowed a writ appeal concerning a GST demand order. The court held that the respondent's order demanding Rs. 98,83,029/- violated ... Challenge to impugned order - scope of SCN - demand in the impugned order in excess of the amount specified in the Show Cause Notice - Violation of principles of natural justice - jurisdiction - HELD THAT:- The question of limitation coupled with an issue relating to jurisdiction is to be decided based on certain factual aspects which can be canvassed before the respondent. Since an opportunity is given by the learned Single Judge, it is open to the appellant to raise all its defence in the reply before the respondent. This Court is of the view that the further observation of the learned Single Judge giving scope for restoration of the order in case no reply is filed within three weeks, may not be appropriate. Therefore, the order of the learned Single Judge is set aside to that extent. It is open to the appellant to submit their reply within a period of four weeks from the date of receipt of a copy of this judgment. It is also open to the appellant to raise the question of limitation as well as jurisdiction as contended before this Court. This Writ Appeal is partly allowed. ISSUES PRESENTED and CONSIDEREDThe primary legal issues considered in this judgment include:1. Whether the order issued by the respondent demanding a sum exceeding the amount specified in the original Show Cause Notice violates the principles of natural justice and the statutory provisions under the GST Act.2. Whether the learned Single Judge's decision to treat the impugned order as a Show Cause Notice and the subsequent directions regarding the filing of a reply were appropriate.3. Whether the appellant's concerns regarding the limitation period and jurisdiction were adequately addressed by the learned Single Judge.ISSUE-WISE DETAILED ANALYSISIssue 1: Violation of Principles of Natural Justice and Statutory ProvisionsThe appellant argued that the order demanding Rs. 98,83,029/- was in violation of the principles of natural justice as it exceeded the amount specified in the original Show Cause Notice, which was Rs. 21,77,261/-. The appellant relied on Sub-Section (7) of Section 75 of the GST Act, which stipulates that the final demand cannot exceed the amount specified in the Show Cause Notice.The Court recognized that the learned Single Judge had accepted the argument regarding the violation of natural justice. The original Show Cause Notice was confined to a specific amount related to a reduction claimed based on a notification regarding Input Tax Credit. However, the impugned order treated the appellant as an 'Intermediary' and relied on facts furnished by the appellant, leading to a higher demand.Issue 2: Appropriateness of Treating the Order as a Show Cause NoticeThe learned Single Judge set aside the impugned order and treated it as a Show Cause Notice, allowing the appellant to submit a reply within three weeks. The appellant challenged this approach, particularly the direction that the impugned order would stand restored if no reply was filed within the stipulated time.The Court found that the further observation of the learned Single Judge, which allowed for the restoration of the order if no reply was filed, was inappropriate. The Court modified this aspect of the order, granting the appellant four weeks to submit their reply and allowing them to raise issues of limitation and jurisdiction.Issue 3: Limitation and Jurisdiction ConcernsThe appellant expressed concerns that a fresh Show Cause Notice on the new grounds would be time-barred under Section 73 of the GST Act. The Court acknowledged that questions of limitation and jurisdiction involve factual aspects that can be addressed before the respondent. The appellant was given the opportunity to raise these defenses in their reply.SIGNIFICANT HOLDINGSThe Court held that the order of the learned Single Judge was to be set aside to the extent that it allowed for the restoration of the impugned order if no reply was filed within three weeks. The Court extended the time for the appellant to submit their reply to four weeks and permitted the appellant to raise issues of limitation and jurisdiction.The core principle established is that an order demanding an amount exceeding that specified in the original Show Cause Notice violates the principles of natural justice and statutory provisions. The Court emphasized the importance of adhering to the procedural safeguards and limitations outlined in the GST Act.The final determination was that the Writ Appeal was partly allowed, with no costs, and the connected miscellaneous petition was closed. The appellant was granted additional time to respond, and the opportunity to address their concerns regarding limitation and jurisdiction was preserved.